3 reasons the market is down on gilead sciences

3 Reasons the Market Is Down on Gilead Sciences

2013’s Market Darling...

...Hasn’t Seen the Love Continue

1. Remember That First Chart?• The stock has doubled over the last year, but if we

zoom out a little more it’s been quite a run.• Some investors are

likely selling to lock-in gains.

2. Sovaldi, Sovaldi, Sovaldi• Hepatitis C drug approved in Dec.• Multi-billion dollar potential.• Combination product under FDA

review will increase use.• With 2013 revenue of $11.2 billion, Sovaldi sales will have a substantial impact on

Gilead’s earnings.• With reliance, comes worry...

Source: Gilead Sciences

About Pricing and...

Competition• AbbVie’s (NYSE: ABBV) combination product is just

a few months behind Gilead’s (Nasdaq: GILD) Sovaldi combination, but it doesn’t appear to be as convenient to take.

• Merck (NYSE: MRK) is further behind, but looks like it has a combination pill that works as well as Gilead’s combo – cure rates in the 95%+ range – and could be taken just once per day. Phase 3 data should be available next year.

3. The Whole Industry Is Down• Gilead has underperformed the index for the year...

3. The Whole Industry Is Down• But if you look since the peak, it’s matching the

index.• Investors are

shying away fromthe biotech’s risk.

Where’s the Bottom?

• Hard to predict.• Pricing issues might blow over, but worry about

competition will continue until Gilead proves its dominance.

• End of industry downturn will be determined by investors’ risk tolerance, which could tighten further.

Think Long Term

• If you’re planning on holding for multiple years, catching the bottom doesn’t matter too much.

• Gilead is expected to generate its market cap in cash over the next seven years.

• Even if it takes 10 years, it’s a substantial deal for a company with growth potential.

6 Stock Picks Poised for Incredible Growth